Wheat May '20 (ZWK20)
|Contract||Chicago Soft Red Winter Wheat|
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||35 cents per bushel ($1,750 per contract) Expanded limit 55 cents|
|Contract Size||5,000 bushels|
|Trading Months||Mar, May, Jul, Sep, Dec (H, K, N, U, Z)|
|Trading Hours||7:00p.m. - 7:45a.m. and 8:30a.m. - 1:20p.m. (Settles 1:15p.m.) (Sun-Fri) CST|
|Value of One Futures Unit||$50|
|Value of One Options Unit||$50|
|Last Trading Day||The business day prior to the 15th calendar day of the contract month|
Wheat is a cereal grass, but before it was cultivated it was just a wild grass. It has been grown in temperate regions and cultivated for food since prehistoric times. Wheat is believed to have originated in southwestern Asia. Archeological research indicates that wheat was grown as a crop in the Nile Valley about 5,000 BC. Wheat is not native to the U.S. and was first grown here in 1602 near the Massachusetts coast. The common types of wheat grown in the U.S. are spring and winter wheat. Wheat planted in the spring for summer or autumn harvest is mostly red wheat. Wheat planted in the fall or winter for spring harvest is mostly white wheat. Winter wheat accounts for nearly three-fourths of total U.S. production. Wheat is used mainly as a human food and supplies about 20% of the food calories for the world's population. The primary use for wheat is flour, but it is also used for brewing and distilling, and for making oil, gluten, straw for livestock bedding, livestock feed, hay or silage, newsprint, and other products.
Wheat futures and options are traded at the CME Group, the Mercado a Termino de Buenos Aires (MAT), Sydney Futures Exchange (SFE), London International Financial Futures and Options Exchange (LIFFE), Marche a Terme International de France (MATIF), Budapest Commodity Exchange (BCE), the Kansas City Board of Trade (KCBT), the Minneapolis Grain Exchange (MGE), and the Winnipeg Commodity Exchange (WCE). The CME's wheat futures contract calls for the delivery of soft red wheat (No. 1 and 2), hard red winter wheat (No. 1 and 2), dark northern spring wheat (No. 1 and 2), No.1 northern spring at 3 cents/bushel premium, or No. 2 northern spring at par.
Prices - CME wheat futures prices (Barchart.com electronic symbol ZW) posted the low for the year in January of $4.1325 a bushel. The outlook for record global output and abundant supplies was bearish for wheat prices as the USDA projected global 2017/18 wheat production at a record 755.21 MMT and global 2017/18 wheat ending stocks at a record 268.42 MMT. Prices moved sideways to higher the first half of 2018 on concern about U.S wheat output as the USDA projected U.S. 2017/18 wheat production would fall to a 15-year low of 1.741 billion bushels due to a drop in 2017/18 U.S. wheat acreage to 46 million acres, the fewest wheat acres since 1919. Wheat prices then soared to a 3-1/2 year high of $5.93 a bushel in July on drought concerns in Russia, the world's third-largest wheat producer, that prompted the USDA to cut its Russia 2018/19 wheat crop estimate to 67 MMT, the first decline in 6 years. Wheat prices than fell back as beneficial rains improved Russia's wheat crop and prompted Russia's Agriculture Ministry to raise its Russia 2018/19 wheat harvest estimate to 69 MMT from a prior estimate of 64.4 MMT. Reduced crop concerns allowed Russia to maintain its record export pace as Russia 2017/18 wheat exports rose to a record 40 MMT and the Russian government extended its zero export tax on wheat until July 2019, which reduced demand for more-expensive U.S. wheat. Wheat prices then stabilized and moved sideways into year-end on the outlook for smaller global output after the USDA in its October WASDE report cut its global 2018/19 wheat production estimate to a 4-year low of 730.92 MMT and cut its forecast of U.S. 2018/19 wheat production to only 1.884 billion bushels, the second lowest production level of the past 12 years. Wheat prices finished 2018 up +17.9% yr/yr at $5.0325 a bushel.
Supply - World wheat production in the 2018/19 marketing year is forecasted to fall -3.9% yr/yr to 733.414 million metric tons, down from last year's record high of 763.060. The world's largest wheat producers in 2018/19 are expected to be the European Union with 18.8% of world production, China with 18.1%, India with 13.6%, Russia with 9.5%), and the U.S. with 7.0%. China's wheat production in 2018/19 is expected to fall -1.4% yr/yr to 132.502 million metric tons, down from last year's record high of 134.334. India's wheat production in 2018/19 is expected to rise by +13.6% yr/yr to a record high of 99.700 million metric tons. The world land area harvested with wheat in 2018/19 is expected to fall -1.0% yr/yr to 217.3 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). World wheat yield in 2018/19 is expected to fall -2.7% yr/yr to 3.36 metric tons per acre, down from last year's record high of 3.45.
U.S. wheat production in 2018/19 is forecasted to rise by +6.3% yr/yr to 1.884 billion bushels, which will be below the record crop of 2.785 billion bushels seen in 1981-82. Ending stocks for U.S. wheat for 2017.18 fell by -6.8% yr/yr to 1.100 billion bushels. The U.S. winter wheat crop in 2018 fell by -6.7% yr/yr to 1.184 billion bushels, which was well below the record winter wheat crop of 2.097 billion bushels seen in 1981. U.S. production of durum wheat in 2018 rose by 41.1% yr/yr to 77.287 million bushels. U.S. production of other spring wheat in 2018 rose +50.0% yr/yr to 623.232 million bushels. The largest U.S. producing states of winter wheat in 2018 were Kansas with 23.4% of U.S. production, Washington with 10.7%, Colorado and Montana with 6.4% each, and Texas with 7%. U.S. farmers planted 46.012 million acres of wheat in 2017 (latest data), which was down 8.2% yr/yr. U.S. wheat yield in 2018/19 is expected to be up by +2.8% yr/yr to 47.6 bushels per acre, down from the 2016/17 record high of 52.7.
Demand - World wheat utilization in 2018/19 is forecasted to rise +0.2% yr/yr to 743.7 million metric tons. U.S. consumption of wheat in 2018/19 is expected to rise +6.0% yr/yr to 1.152 billion bushels, but still below the 2012/13 record high of 1.389 billion bushels. The wheat consumption breakdown in 2018/19 is expected to be 84.2% for food, 10.4% for feed and residuals, and 5.4% for seed.
Trade - World trade in wheat in 2018/19 is expected to rise by +0.7% yr/yr to 183.9 million metric tons, a new record high. U.S. exports of wheat in 2018/19 are expected to rise by +13.8% yr/yr to 1.025 billion bushels but remain below the record high of 1.771 billion bushels of exports seen in 1981/82. U.S. imports of wheat in 2018/19 are expected to fall -14.2% yr/yr to 135.0 million bushels, and remain below the 2013/14 record high of 172.5 million bushels.
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